Although money demand equations have been estimated for many western countries, only recently have researchers investigated the demand for money in centrally planned economies like Chow [7], who helped pioneer the analysis of Chinese macro data, estimates a simple money demand function derived from the quantity theory. Using annual data from 1952 through 1983, he concludes that the quantity theory provides a reasonable first approximation in explaining the demand for money in China. [7, 325] Portes and Santorum [27] use real and nominal adjustment specifications and test for the homogeneity of money demand with respect to the price level and real income.' Feltenstein and Farhadian [11] estimate a money demand function based on Cagan's [3] work, and Blejer et al. [1] estimate an error correction model using data for only the 1980s. Both studies find that the demand for real balances is explained by real income and an opportunity cost measure.
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Hafer et al. (1994) studied this question.